Big Tech earnings season has begun.
Netflix and Tesla kicked things off last week; Google and Microsoft kept it going July 25. Microsoft (MSFT) -) reported a 20.6% rise in adjusted earnings at $2.69 per share. Revenue from its cloud division, Microsoft Azure, rose 26%, just about on par with Street expectations of 25%, and group revenue jumped 8.4% to $56.2 billion.
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But high expenditures for the quarter -- which rose 37% to $10.7 billion -- set off a sell-off. Shares of the tech giant plummeted following the call and were down more than 3% in pre-market trading.
Google, meanwhile, beat Wall Street's expectations, reporting earnings of $1.44 per share (up from last year's $1.21). Group revenue jumped nearly 10% year-over-year to $74.6 billion, and investors rejoiced; shares of Google (GOOG) -) surged post-earnings, jumping around 7% in after-hours trading.
And on the heels of these reports, Wedbush tech analyst Dan Ives said the next Industrial Revolution has officially begun. And Google and Microsoft are going to lead it.
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"I think this is an inflection point in that story. You look at AI, this is a gold rush. This is a 1995 moment unlike anything we've seen since the internet," Ives told CNBC. "And you look at where Google sits, you look at where Microsoft sits, they sit at the top of the mountain. Amazon right now, their back's against the wall when it comes to cloud."
And with several major indices up out of bear market lows -- the S&P 50 is up 19.4% for 2023 and the Dow Jones is up around 7% for the year -- some investors are convinced that bull market territory has arrived.
The only issue is that these rallies are still relatively narrow, with much of the positive push being led by Big Tech gains. This is something Ives thinks will continue.
"Ultimately, software and chips are going to lead the rally. This is a golden age for software. That's why this is a bright green light to own tech," Ives said. "I'm not saying that there are not losers on the other side of this. But ultimately, I believe this is the start of a new tech bull market."
